Podcast
Questions and Answers
What strategy was found to be the most effective in the repeated prisoner's dilemma tournament held by Robert Axelrod?
What strategy was found to be the most effective in the repeated prisoner's dilemma tournament held by Robert Axelrod?
- Random Selection
- Always Defect
- Tit for Tat (correct)
- Cooperate Always
Which of the following best describes the concept of corporate collusion?
Which of the following best describes the concept of corporate collusion?
- Businesses expand into new markets
- Organizations reduce output to increase profits
- Firms compete to reduce prices
- Companies agree to set high prices (correct)
What is the primary purpose of employing the judo strategy in business?
What is the primary purpose of employing the judo strategy in business?
- To engage in direct competition
- To increase market share aggressively
- To avoid head-to-head conflict (correct)
- To take advantage of superior force
In the context of the prisoner’s dilemma, what can result from one firm lowering prices while another maintains high prices?
In the context of the prisoner’s dilemma, what can result from one firm lowering prices while another maintains high prices?
What is the potential outcome of overfishing when fishermen do not cooperate?
What is the potential outcome of overfishing when fishermen do not cooperate?
Which competition example illustrates price competition between beverage companies?
Which competition example illustrates price competition between beverage companies?
What does the term 'arms race' in the context of the Cold War refer to?
What does the term 'arms race' in the context of the Cold War refer to?
What is the main benefit of workplace collaboration among employees?
What is the main benefit of workplace collaboration among employees?
Flashcards
Prisoner's Dilemma
Prisoner's Dilemma
A situation where two individuals or firms must choose between cooperating or betraying each other, without knowing what the other will do.
Tit for Tat
Tit for Tat
A strategy in a repeated Prisoner's Dilemma where an individual cooperates on the first move and then mirrors the opponent's previous move. It promotes cooperation by rewarding cooperation and punishing defection.
Arms Race
Arms Race
A situation where two opposing forces, like nations or companies, continuously increase their military or economic power in response to each other's actions, often leading to instability and escalation.
Corporate Collusion
Corporate Collusion
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Overfishing
Overfishing
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Judo Strategy
Judo Strategy
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Price Competition
Price Competition
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Advertising Strategy
Advertising Strategy
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Study Notes
Low-Cost Airlines
- Southwest Airlines was the first low-cost airline, founded in 1967.
- Ryanair, founded in 1985, was a European low-cost airline, aiming for minimal costs.
Prisoner's Dilemma
- A game theory concept where two entities choose between cooperation and betrayal.
- Uncertainty about the other's choice is essential.
- Relevant in business, when firms strategize considering each other's decisions.
- Examples include pricing, advertising, research & development, and sustainability policies.
Cooperation vs. Competition
- Businesses compete with each other by competing on prices (Coke vs. Pepsi).
- Companies strategize on advertising methods (McDonald's vs. Burger King).
- Competitor's R&D investment and innovation (Apple vs. Samsung)
- Environmental and sustainability policies (Shell vs. BP)
Repeated Prisoner's Dilemma Tournament
- Held in the 1980s by political scientist Robert Axelrod.
- Mathematicians and scientists used different strategies to play the game repeatedly.
- The "Tit for Tat" strategy proved most effective.
- "Tit for Tat" involves cooperating first and then mirroring the opponent's move.
- Reciprocity is essential in promoting cooperation.
Strategic Examples of the Prisoner's Dilemma
- Arms Race (Cold War): US and USSR faced a dilemma between continuing nuclear armament or stopping, demonstrating a lack of trust.
- Corporate Collusion: Competing companies may collude to fix prices; lower prices cause market share gains.
- Overfishing: All fishermen benefit from controlled fishing. Individual overfishing leads to resource depletion.
- Political Campaigns: Attacks can hurt voters, but can give an advantage if not responded to.
- Workplace Collaboration: Shared effort leads to productivity. A lack of effort by some diminishes gains.
Judo Strategy
- It involves swift movement to secure advantage (uncontested ground).
- Respond to attacks by giving way, conserving resources.
- Use opponent's weight and strategies against them.
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